President Mohamed Morsi has annulled a decree he issued last month that hugely expanded his powers and sparked angry protests in Egypt, officials say.
However, a news conference in Cairo was told that a controversial referendum on a draft constitution would still go ahead as planned on December 15th.
Mohamed Morsi’s critics have accused him of acting like a dictator, but he says he is safeguarding the revolution.
He said the extra powers were needed to force through reforms.
Mohamed Morsi’s decree of November 22nd stripped the judiciary of any right to challenge his decisions and triggered violent protests on the streets of Cairo.
“The constitutional decree is annulled from this moment,” said Selim al-Awa, an Islamist politician acting as a spokesman for a meeting Mohamed Morsi held with political and public figures on Saturday.
But he said the referendum on a new constitution would go ahead because it was not legally possible for the president to postpone it.
The meeting had been boycotted by the main opposition leaders who had earlier called for their supporters to step up their protests. They want both the decree and the referendum cancelled.
President Mohamed Morsi has made a major compromise but it is yet to be seen if it will defuse tension on the streets.
Although the decree has been annulled, some decisions taken under it still stand.
The general prosecutor, who was dismissed, will not be reinstated, and the retrial of the former regime officials will go ahead.
But President Mohamed Morsi’s sweeping powers have gone.
Earlier, Egypt’s powerful military warned it would not allow Egypt to spiral out of control and called for talks to resolve the conflict.
“Anything other than that [dialogue] will force us into a dark tunnel with disastrous consequences; something that we won’t allow,” it said.
The president’s supporters say the judiciary is made up of reactionary figures from the old regime of strongman Hosni Mubarak.
But his opponents have mounted almost continuous protests since the decree was passed.
They are also furious over the drafting of the new constitution because they see the process as being dominated by Mohamed Morsi’s Islamist allies.
An umbrella opposition group, the National Salvation Group, has demanded Mohamed Morsi rescind his decree and postpone a referendum on the new constitution.
Several people have been killed in the recent spate of anti-government protests, and the presidential palace has come under attack.
The Cairo headquarters of the Muslim Brotherhood, the movement to which Mohamed Morsi belongs, were set on fire.